Title Insurance

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What is Owner's Title Insurance? 

The owner's title policy may be purchased by a purchaser or owner of real estate and covers the owner for title issues up to the amount of the purchase price. Its purpose is to insures the purchaser or owner against loss from defective titles, liens, and encumbrances.
 

A title is the evidence, of right, that a person has to the ownership and possession of land. It is possible that someone other than the owner has a legal right to the property. If that right can be established, this person can claim the property outright or make demands on the owner as to its use. Title insurance is a means of protecting yourself from financial loss in the event that problems develop regarding the rights to ownership of your property. There may be hidden title defects that even the most careful title search will not reveal. In addition to protection from financial loss, title insurance pays the cost of defending against any covered claim. 

Your lender likely will require that you purchase a Lender's Policy. This policy only insures that the financial institution has a valid, enforceable lien on the property. Most lenders require this type of insurance, and typically require the borrower to pay for it. An Owner's Policy on the other hand is designed to protect you from title defects that existed prior to the issue date of your policy. Title troubles, such as improper estate proceedings or pending legal action, could put your equity at serious risk. If a valid claim is filed, in addition to financial loss up to the face amount of the policy, your owner's title policy covers the full cost of any legal defense of your title. 

If you have questions about owner's title insurance or need to obtain owner's title insurance, please contact an attorney at Lee & Associates, P.C.  

What are the benefits of the Owner's Policy? 

• Pre and Post Policy Protections: The Owner's Policy coverage protects homeowners against claims arising both before and after the policy date.
• Expanded Access Coverage: The Owner's Policy provides homeowners with expanded access protection for right of access to and from the property.
• Restrictive Covenant Violations: The Owner's Policy protects homeowners against the loss of title to property because of a violation of a restrictive covenant that occurred before the insured acquired title.
• Building Permit Violations: The Owner's Policy covers homeowners if they must remove or remedy an existing structure (except for boundary walls and fences) because it was built without a building permit from the proper government office.
• Subdivision Law Violations: The Owner's Policy protects homeowners if they can't sell the property or get a building permit because of a violation of an existing subdivision law.
• Zoning Law Violations: The Owner's Policy protects homeowners if they must remove or remedy existing zoning laws or regulations.
• Encroachment Protections: Covers homeowners if forced to remove an existing structure because it encroaches on a neighbor's land.
• Water and Mineral Rights Damage: The Owner's Policy provides coverage if a homeowner's existing improvements, including lawns, shrubbery and trees, are damaged because someone exercised a right to use the surface of the land for the extraction of minerals or water.
• Supplemental Tax Lien: The Owner's Policy protects homeowners if a supplemental tax lien is filed and assessed against the property because of new construction or a change of ownership prior to the policy date.
• Map Inconsistencies: The Owner's Policy provides coverage if the map attached to the homeowner's policy does not show the correct location of the land, according to public records.
• Continuous Coverage: The Owner's Policy covers homeowners forever, even if they no longer have the title. The policy insures anyone who inherits the title because of the homeowner's death and the spouse who receives the title after a dissolution of marriage.
• Value-Added Protection: Owner's Policy increase their coverage as the value of your home increases. The policy amount automatically increases by ten percent per year for five years, up to 150% over the original policy amount.  

What is Lender's Title Insurance? 

Lender's Title insurance insures that the lender has a valid, enforceable lien on the property and protects mortgage lenders up to the amount of the loan. Most lenders require this type of insurance, and typically require the borrower to pay for it. The purpose of this insurance is only to protect the lender's interest. It does not protect the borrower's/purchaser's interest in the property. 

Lender's title insurance insures the mortgage lender against mechanics liens and unrecorded liens, unrecorded easements and access rights, and other unrecorded instruments and title defects, and it specifically protects the lender from claims and losses that could arise out of a defective or unmarketable title. 

When a homeowner refinances, the mortgage lender will require the homeowner to purchase new lender's title insurance, even if the homeowner/borrower had previously purchased lender's title insurance and is refinancing with the same mortgage lender. This is due to the fact that the existing policy expires when your prior mortgage is paid off. 

If you have questions about lender's title insurance or need to obtain lender's title insurance, please contact an attorney at Lee & Associates, P.C.